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Advertising in Cable – Where Do We Go From Here?

Motorola’s advanced advertising strategy has evolved significantly over the last couple of years, but much of the work and change has taken place outside of the public eye. I finally had a chance to sit down with Motorola’s Buddy Snow on an Amtrak train recently, and here are the answers he had about what Motorola’s been doing and where the industry is headed. Want to know what’s held advanced advertising applications back? Wondering about the targeted advertising trials taking place today? Still curious about what the heck cable is doing with Canoe? Read the interview below. And stay tuned for more coverage later today live from The Cable Show 2008.

Let’s start with a quick look at definitions. What do you mean by advanced advertising?
Today “advanced advertising” generally comprises three key areas:

  1. Targeting ads more effectively with respect to demographics, viewing patterns and location of the viewer
  2. Dynamically inserting the ads into video streams as late as possible before the video is delivered to the consumer
  3. Reporting back accurate and timely viewing/usage patterns for programs and advertising to help determine the effectiveness of the ads

Of course there are other advanced applications on the horizon too, like interactive commerce through your TV set, but the critical near-term goal is to significantly improve delivery of commercials to the audience that is most likely to buy the products advertised.

Why has it taken the television industry so long to implement targeted advertising? It feels like we’ve been talking about this for years.
Advertisers have been clamoring for this for years. Right now when they try to measure the effectiveness of their ad campaigns, they often have to wait months to find out who watched their commercials. That’s an eternity in the ad business, particularly given the amount of fast, detailed information available with Internet advertising.

Two things have held the cable industry back. First, the cable industry had to convert their core video network to digital, which it’s now essentially done. Second, the back office systems for advertising in cable television haven’t been ready for targeted advertising up to this point. The technology employed in this area today was originated 15-20 years ago and was not designed for real-time digital television services much less on demand content. These advertising systems are being re-architected to be standards-based while driving a real-time advertising delivery system that continuously: makes targeting decisions, marries the right ad with the right video stream going to the right location, and records what actually happened for reporting purposes.

Motorola hasn’t talked much about targeted advertising in the past. Why has the focus shifted now?
The focus has always been there in the sense that we’ve been working on targeted video delivery for a long time. Our goal is to personalize consumer media experiences for entertainment and advertising. The basic delivery equipment for personalized media is essentially the same as that deployed for creating digital video networks. The technology advances we’re discussing now are mostly software updates to that delivery equipment coupled with best-in-class media processing products.

If you look at the acquisitions we’ve made in the last 18 to 24 months, we’ve built a powerful portfolio of media processing products that substantially enhance our ability to deliver targeted content. From Broadbus with the B-1 video server, to Vertasent and our switched digital video technology, to Terayon and our industry-leading CherryPicker application platform, we have a raft of solutions that process, target and transport video – and can be used for advanced advertising applications as easily as for entertainment delivery.

There seem to be a lot of existing targeted ad trials. What are you seeing out of these trials and does Motorola have a role in them?
Motorola absolutely has a role in that we have the largest deployed base of video delivery network equipment, ad splicers, and set-tops that are supporting these trials, whether they are network- or client-based solutions.

Interestingly, though, the trials that are taking place today have more to do with cable operators testing business models than testing the technology. Ultimately, the key technology is going to have to come from the existing network systems that deliver every other kind of video content. Targeted advertising solutions that are laid on top of the core network tend to be expensive and bandwidth hungry.

So how do we get from the trials taking place today to mass deployments?
The process is already happening because in a lot of cases operators already have the basic advertising-ready equipment in their systems. While operators test advertising business models, Motorola will be upgrading its network equipment with software updates specific to ad delivery in response to evolving requirements from our customers. In parallel, the advertising back office systems will evolve to support the requirements of advanced advertising. Again, the great thing for operators is that they either have a lot of the pieces in place already or are planning to install them. For example, at the Cable Show Motorola is showing the B-1 video server reconfigured to act as an ad server. We also just announced a new software version for the popular CherryPicker platform that will allow operators to do digital ad insertions with hundreds of video streams simultaneously.

What about Canoe? There’s been a lot of mystery surrounding the cable industry’s advertising project, but whenever targeted advertising and cable get mentioned together, the conversation inevitably turns to Canoe. Anything you can report?
You’d have to talk to the cable operators for specifics, but basically Canoe is designed to create a virtual nationwide advertising footprint. It does this in part by requiring technical solutions to the advertising back office disparities across cable systems. Additionally, Canoe is driving the creation of standard interfaces that create interoperability among various components of the advertising delivery systems inside each cable operator’s network. We’re very much looking forward to working closely with the Canoe initiative as it develops further.

How targeted is advertising going to get? Are the benefits really going to match what seem to be exceedingly high expectations?
There is a lot to be gained. Cable operators make money primarily from two sources –selling consumer services and selling advertising. On the consumer side, the operators have made huge strides in maintaining and increasing ARPU (average revenue per user) by adding new applications like HDTV and digital voice. But not much has changed on the advertising side in quite a while. By offering targeted applications, operators can provide much better information and deliver more profitable audiences to advertisers, who in turn will spend more money with the operators. Ultimately operators will take targeted advertising all the way to the level of addressable advertising, or advertising that is targeted to individual devices based on both demographics and usage patterns. Addressable advertising promises a highly profitable new revenue stream.

Of course, one note to keep in mind is that all device usage information will be kept separate from consumer identification data, the same way advertising works on the Internet. That’s a point that is critical to safeguarding privacy.

How quickly do you think things are going to move?
Things are going to move pretty quickly now. Look for the bulk of changes to happen in the next 18 to 24 months.

7 Responses

  1. […] a lot of comparisons and references to Canoe in the tru2way discussions, suggesting there is a lot going on behind the scenes with the […]

  2. […] found this handy little PowerPoint slide at one stop on Motorola’s Advanced Advertising tour in the booth. As you can see in the chart, video moves from the Motorola CherryPicker to the […]

  3. […] ANGA Show follows on the heels of The Cable Show for a European look at the cable market. I’m hoping to get updates directly from the show floor, […]

  4. […] to linear broadcasts for new episodes of their favorite shows. At least that’s the goal until targeted advertising is widely […]

  5. […] on April 9, 2009 by Mari Silbey Next month CED magazine will highlight a contributed article from Motorola executive Buddy Snow on “Cable’s Online Video Opportunity”. Since the content ties in nicely with some […]

  6. Hey! did you already read it: Nokia N97 is available for Pre-Order in Portugal for 450

  7. […] Advanced advertising has had a lot of false starts in the TV world. We’re starting to see some traction for interactive ads in the US with Comcast’s successful request-for-information spots, and Canoe’s announcement that it is now offering interactive ad inventory on a national basis. But the interactive revolution has been slow, and the push behind addressable advertising even slower. […]

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